Pensioners are preparing for battle to prevent the Government's assault on
retirement income.

If the Government thought this latest tax grab wouldn't cause the same outcry as the removal of child benefit from higher earners, then they need to think again.

The National Pensioners Convention has launched an 11th-hour bid to stop the Government raising £3.5bn from older taxpayers over the next five years, and in doing so bringing 230,000 retirees back into the tax net.

Itsonline petition has attracted 74,000 signatures. It is just 26,000 short of the 100,000 required for a debate in the House of Commons.

Neil Duncan-Jordan, a spokesman for the convention, said: "We want as many people as possible to sign the petition as we need to get the plight of pensioners higher up the political agenda. We do not object to harmonising the tax regimes of those in work and people who are retired. But it should not be done by penalising pensioners."

Baroness Joan Bakewell, campaigner for older people, called the changes "fundamentally unfair". "The claim that it makes things simpler for pensioners to understand adds insult to injury," she said.

Older taxpayers are being squeezed on a number of fronts. Many are seeing smaller increases to both their occupational pension, and the second state pension (S2P) as both are linked to the Consumer Prices Index, rather than the higher Retail Prices Index. Many pensioners have had their winter fuel allowance reduced from £250 to £200, while those aged over 80 have seen this benefit cut from £400 to £300.

But in the last budget George Osborne, the Chancellor, announced he would axe a special tax break that pensioners have enjoyed since 1925. Currently this gives pensioners a higher tax allowance than the general population. So they can earn an extra £3,000 from pensions or savings, before paying income tax.

This concession was introduced by Sir Winston Churchill in acknowledgement that most pension incomes are lower than the rest of the workforce, and in recognition of the years already spent paying tax and National Insurance.

But last year Mr Osborne announced that anyone who reaches their 65th birthday after April 5 this year will no longer qualify for the higher personal tax allowance at all, and it will be frozen for those already receiving it.

Mr Duncan-Jordan said: "This means many pensioners on quite modest incomes will pay more tax. Their pension increases are likely to be smaller because of the link with CPI. So they will get less, and what they do get will be eaten up by higher taxes.

He adds it is incorrect to call it a granny tax. "This is a tax which will largely hit men, as very few female pensioner’s have an income high enough. But it will certainly hit a lot of grandads."

The Coalition defended its policy, saying that as the personal allowance for all is rising, it is no longer necessary to make pensioners a special case.

In the current tax year, for example, the personal allowance for under-65s rose by £630 to £8,105, and is due to leap again to £9,440 in April, with a target of £10,000 during this parliament.

However, the allowance for the 65s and over will not increase at all from the current £10,500 (£10,660 for the 75s and over). Those currently approaching 65 will be left with the same allowance as when they were in work and enjoying a much higher income.

According to the Government, 4.4 million pensioners will lose an average £83 in the 2013-14 tax year. However, many could find themselves paying up to £479 more tax next year, or £511 if they are aged over 75, than they might have expected before this change, costing a couple nearly £1,000.

Pensioners with birthdays days apart will pay significantly different amounts of tax. If you hit 65 on April 4, you will pay around £212 less tax than someone with a birthday on April 7.

Calculating how much extra tax you might pay is complex, as the higher allowance was clawed back for better-off pensioners once their income hit £25,400. It is reduced by £1 for every £2 of income, until it is lost altogether at about £30,000.

In addition some elderly couples will still receive a married couples allowance worth up to £770 a year if one of them is born before April 6 1935.

John Whiting, policy director of the Chartered Institute of Insurance, said: "There is going to be a great deal of confusion. Those whose 65th birthday is before April, may not bother claiming thinking they no longer qualify and could miss out. Others who haven't previously had to fill in a self-assessment form will have to do so now."

The convention is also concerned that other pensioner perks are in the firing line. Currently, any household where someone is above the female state pension age (currently 61) can claim a winter-fuel allowance of £200, rising to £300 at 80. They also qualify for free public transport with a bus pass at 61 and the over 75s get a free television licence worth £145.

Mr Duncan-Jordan said: "We believe these will remain in place until the next general election. But we expect all parties to go into the election with a programme of reform.

"Taking bus passes away from millionaires will not save the Government much money, as wealthy people do not travel by bus. If reform is about raising additional funds, then we might expect a more draconian reform, where all perks cease, except for the poorest pensioners on means-tested benefits."

How OAPs can pay less tax

Danny Cox, an adviser at Hargreaves Lansdown, said: "It is understandable pensioners feel aggrieved by these changes, and worried about the future. But there are steps you can take to make sure you still pay as little tax as possible."

Plan well ahead, so that both partners have income at retirement. Mr Cox said: "All too often a couple put all the pension savings in the man's name because he is the higher rate taxpayer and can claim more relief at source. However, this means he could end up paying substantial amounts of tax, while his wife isn't even using up her personal allowance."

Where one partner is pension rich and the other pension poor, it can make sense to withdraw a substantial sum from the scheme as a tax-free lump sum, to reduce tax bills and provide an income for the poorer spouse.

Make sure this sum and any other investments are sheltered in an Isa where possible.

Always check that any other income is split between partners to use up any available tax allowances.

Consider buying a life annuity. However, Mr Cox said: "The returns on these are not attractive. We would prefer a well-spread Isa portfolio to provide a tax-free income." P ensioners will be hit by the new "granny tax" in just two months' times which will see some couples lose around £1,000 a year.